Friday, February 1, 2008

Microsoft bids record $42b for Yahoo! : inside news

[Updated] It's true: Microsoft announced today that it has bid $31 a share to acquire Yahoo!, representing a 62% premium over the former search engine giant's recent market value. All about the deal -- and the tricks of fate that make it a popcorn event.Update: Microsoft hasn't managed to buy Yahoo! yet, which was kinda expected. Hey, imagine the truckload of pride Yahoo! has to swallow. I hope this even keeps me interested. (Do you think MS buying Yahoo! would be a good thing for internet users? Drop a comment.)
It's true: Microsoft announced today that it has bid $31 a share to acquire Yahoo!, representing a 62% premium over the former search engine giant's recent market value. The total value of the offer is $44.5 billion in cash and stock, making it the largest bid ever in the hi-tech industry.
Pundits are claiming that it's an incredibly expensive deal, even for a company the size of Microsoft. Michael Liedtke of AP describes the situation brilliantly:
Unable to topple Google Inc. on its own, Microsoft Corp. is trying to force crippled rival Yahoo Inc. into a shotgun marriage, with a wager worth nearly $42 billion that the two companies together will have a better chance of tackling the Internet search leader.
(The deal is valued differently across the news sites I'm currently madly surfing.) In any case, this move shows just how desperate Microsoft is to ensure its digital supremacy. The future is less desktop and more online then, eh?
Microsoft has to do this deal. It's a battle that Microsoft needs to win, said AMR Research analyst Jonathan Yarmis.
It's a classic case of a buyer overbidding to blow any potential competitors out of the water, according to James Owers, a Georgia State University professor of corporate finance.
Analysts are still unsure whether the deal is going to take place -- and many are claiming that Microsoft might have to ward off other bidders, such as Baidu.com. There's also a fair chance that the Redmond, Washington-based software giant will need to raise the bar even further to get the job done.
In a classic twist of fate,

Google shares fell $48.40, or 8.6 percent, to close at $515.90 Friday.

Shortly after Microsoft disclosed its intentions, the U.S. Justice Department said it is "interested" in reviewing antitrust issues. European Union officials declined to comment, but analysts said Microsoft probably will face more challenges getting a Yahoo! acquisition approved in Europe than the United States.